I don't pretend to understand much of what follows but it's clear that Bank of America is preparing to screw us taxpayers and the "watchdogs" who are supposed to stop this stuff are promoting it.
The "regulators" appear to be in bed with the very people they are supposed to be regulating.
Read this article.
Here are the highlights.
Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation…
Bank of America’s holding company — the parent of both the retail bank and the Merrill Lynch securities unit — held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades.
That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.
Okay, you ask, so WTF does this mean and WhyTF should I care? This is my understanding of what just happened.
1. BOA holds $75 TRILLION in "derivatives." These are shaky "investments" that "derive" their value from other instruments or investments and are essentially bets on how those other investments will perform. Derivatives are NOT backed up by anything solid, such as collateral.
2. Derivatives, because they are so shaky, are not insured by any entity. Your bank deposits -- checking, savings, CD's, and the like -- are insured by the FDIC. Derivatives are insured by nothing.
3. BOA is moving something like $53 TRILLION worth of derivatives into one of their subsidiaries that IS insured.
4. This way, if -- should we say WHEN? -- these derivatives collapse in value, the bank into which they have been moved will collapse, and, because it is an insured entity, guess who gets to bail them out???
Why do I feel like I just got f****d and didn't even get kissed?
Maybe someone smarter than I can explain that there's nothing for me to worry about.